Vinachem wants to sell off sinking chemical plant to pay debts

The Ninh Binh plant has faced many difficulties and owed around $116.03 million to creditors as of December 2018. Photo by VnExpress/Phuong Vy

State-owned chemical group Vinachem, facing mounting pressure from debts, wants to sell a major fertilizer plant to pay them off.

Speaking at a recent government-held meeting, the company’s chairman Nguyen Phu Cuong said the financial burden caused by its Ninh Binh urea fertilizer plant could bring down the entire company.

The plant has faced many difficulties and owed around $116.03 million to creditors as of December 2018, he said. The loans carry around 10 percent interest, and late payment fees add another 5 percentage points, he estimated.

Besides, it had to be closed down seven times last year due to various problems. According to the Ministry of Industry and Trade, the plant, in the northern province of Ninh Binh, only operated for 117 days and suffered losses of VND701.8 billion ($30.19 million) during the year.

This took its lifetime accumulated losses to VND4.75 trillion ($204.3 million). The past losses were due to rising production costs, falling prices of its products and high maintenance expenses, according to the Vietnam National Chemical Group, as the company is formally known.

"Now nobody wants to lend money to it," Cuong said. "Vinachem has been injecting funds but this is only enough to cover debt payments, there is no money for production, suggesting a better solution is to sell the plant to pay the debts."

"We have poured an additional VND6 trillion ($258 million) into the plant, which is almost half of our VND13 trillion ($558.4 million) charter capital."

He said the company had great difficulty restructuring this debt, with one creditor already threatening to take it to court. Though the plant still has working capital, it is having to take advance payments from fertilizer distributors.